Clarenville seen as a smart investment
Real estate market is red hot, thanks to Hebron project activity
Recent changes in the Clarenville real estate market have been extraordinary. The amount of money changing hands through the buying and selling of homes has reached unprecedented levels.
In 2011, $18 million was spent on new home construction, compared to $2.5 million a decade before.
The sales of single family and two-apartment units peaked at 113 in 2011, 47 more than the previous year, according to the real estate database Multiple Listings Service. The average sale price has risen from $161,569 in 2009 to $243,487 in 2012.
In the past three years, the town has issued 242 building permits.
Clarenville realtor Brian Smith says the spike in sales and prices is largely due to the influx of people working at the Hebron project, 50 kilometres down the TransCanada Highway. And employment on the project is a year away from peaking.
“We’re finally starting to see people coming by, looking for accommodation …,” he says. “The ramp-up is finally started. The influx of workers is in its infancy now.”
We’re expecting demand is going to increase drastically because of the Hebron project, and that’s certainly going to put pressure on the market, which will drive up prices.
Neil Norcott, realtor
There were 700 workers at Hebron’s fabrication site at the end of 2012, according to a spokesperson for ExxonMobil, one of the project partners. That number will more than triple by the summer of 2014, topping out at 2,400. While the company will provide accommodation on-site for those who want it, workers bringing families to the area will likely settle in communities nearby.
Prices rose before the bulk of the Hebron workers arrived, and that’s partly due to speculation, according to Neil Norcott, a realtor who has been working in Clarenville for about 20 years. He says people are seeing an opportunity to make a profit, a better chance for reward than the stock market or RRSPs provide.
“There’s more interest and activity during lead-up time than during the project itself, and that’s speculation-driven,” he says. “People are anticipating that if they get in now it’s going to be good, more so than waiting until everything gets high, then trying to get in.”
Norcott says he hadn’t seen housing prices top $400,000 in Clarenville until the past year or year and a half. Since then at least four homes have been sold for more than $400,000.
“Mostly the build of choice is driven for the desire for the dream home,” he says. “We’ve had some developments that provide bigger lots than we would normally have seen, which allows for bigger homes to be developed. More people have the resources to build bigger homes.”
The value of the real estate market was reflected in last year’s municipal assessment, which increased average assessed values 32 per cent from the previous assessment three years before. Rents have also gone up. Norcott says that while basement apartment monthly rents averaged $400 to $450 five years ago, today rents of $800 or $900 are common. An upstairs flat in a traditional bungalow went for $500 or $600 then, but now it’s more like $1,100 or $1,200.
Norcott says that as more Hebron project workers trickle into the region, the upward trend in housing sale prices will only continue.
“We’re expecting demand is going to increase drastically because of the Hebron project, and that’s certainly going to put pressure on the market, which will drive up prices,” he says.